Travel Day

Thu, Jan 3, 2013 - 12:06pm

Between packing and heading to the airport, I thought I'd squeeze in this post.

Not much happening today ahead of the FOMC minutes and the BLSBS tomorrow. The metals are consolidating their recent rebound gains and poised to add another leg higher if we can get the headlines we're looking for.

The FOMC minutes will be interesting in that they will be from the meeting back in December when QE∞ was formalized. They'll be released later today so be sure to check ZH or some other news source for the stories.

For now, the metals are hanging around some moving average levels that need to be watched, particularly in silver. I've got the 200-day MA at 30.85 and, so far, that level has acted as support. Let's hope that it holds above there and begins to move higher after all of the news. The 20-day, 50-day and 100-day are all in the 31.50-32.50 area and that is where the next level of resistance will be found if the rally can extend higher.

Lastly, everyone needs to watch the 10-year and the Long Bond over the next few days. Both are sitting at critical support levels which, if broken, will lead to lower prices (higher rates). As you know, QE is all about providing buying support for the treasury market and, if the bond market begins to break down, it would be a sign that the current $85B/month isn't sufficient for this purpose. I have no doubt that the $85B/month level will need to be increased in 2013 given the current run rate of a $1.7T+ federal deficit. A falling bond market might make this happen sooner rather than later.

Have a great day. Tomorrow it's back to business as usual and there will be a full, new post sometime after the BLSBS at 8:30 EST.


About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 3, 2013 - 12:43pm

My Dear Extended

My Dear Extended Family,

Here is the recent IMF conclusion on page #47 & #48 on the potential still remaining in the OTC derivative graveyard. This is not from me, but rather from the establishment itself.

The number the IMF is using is way below the huge number of the global problem, and still they conclude that the derivative market is a world class WMD time bomb.

The following is courtesy of CIGA DC browsing on our behalf. This should be a huge concern to any analyst with their eyes open.



TITF - Too Important to Fail Risk

SIFI - Systemically Important Financial Institution Risk

Topology (from the Greek τόπος, "place", and λόγος, "study") - A major area of mathematics concerned with the most basic properties of space, such as connectedness. (wikipedia)


A major hallmark of SIFIs is their activity in financial derivatives markets. The analysis of this paper has one clear message. The global derivatives markets in the post Lehman period, despite considerable compression of bilateral positions, are unstable and they can bring about catastrophic failure. Quite simply, a threat of failure to any of the SIFIs is an immediate threat to the others. The network topology where the very high percentage of exposures is concentrated among a few highly interconnected banks implies that they will stand and fall together. This topological fragility of the derivatives markets as risk sharing institutions has an implicit moral hazard problem that undermines their social usefulness. The empirically calibrated network for derivatives liabilities manifests a highly clustered core- periphery structure and extreme form of TITF as seen in Figures 5.a- 5.f. The implied socialized losses are very large (to the tune of US$350 billion) and the liabilities arising from extant derivatives network structures cannot be supported by the existing capital base. The good news is that the highly clustered network structure permits targeted management of systemic risk. One of the main contributions of the paper is to use network analysis to design a set of surcharges that will enable the SIFIs in the derivatives markets to internalize the costs imposed on other FIs and also the tax payer by their failure.

Link to full report...

Jan 3, 2013 - 12:43pm

Adios Timbo

News- Timmy Geithner to leave before debt ceiling fun and games

Jan 3, 2013 - 12:45pm

well, for one

i was cheering on nebraska over my gator's enemy georgia, butttttt..............

Jan 3, 2013 - 12:49pm

here you go Turd

Turdites - Comex Contract and Take Delivery

Submitted by California Lawyer on January 2, 2013 - 9:30pm. Hat Tip! 26

Summary for those just now joining:

(1) Genius Turdite hatched the idea for Turdites to buy one Comex silver contract, and stand for delivery. It is NOT using paper or fiat, it is stacking, designed to take silver directly from the Comex. (The idea is that we can see once and for all whether the Comex offers paper over and above the closing price, or instead delivers the 5,000 ounces. Then we will all know for sure whether that rumor is true or just a rumor).

(2) The "purchaser" of the contract is a group of Turdites, who pool their money to buy 1 Comex contract. Turdites pledge to take a share or more, once 1000 shares are pledged, the money is collected, given to Andy, who buys the Comex contract and stands for delivery. So far, there are many Turdites who have pledged to buy shares.

(3) If many Turdites contribute just a little, thus making the buy-in minimal, stacking if you will, then the risk is spread around, and which risk spreading operates just like a Lloyds' insurance syndicate. There is no risk of loss of capital, only risk that silver decreases in price and we overpaid. I am happy to take that risk, because I am a stacker and I value my silver in ounces stacked, not in fiat price per ounce.

(4) If 1000 Turdites pledge to contribute for one share, the buy in is 1/1000th of the full contract. Personally, I am in for at least 2 shares, or more, depending.

(5) One Comex contract is 5,000 ounces, so each share is 5 oz., or about $150-160 per buy in, depending upon price when contract is purchased.

(6) Another Turdite genius suggested that we take delivery, then have the 5,000 ounces turned into speciality rounds.

There you have it.

Fat Willie
Jan 3, 2013 - 12:56pm


It starts on page 2 on the "reality bites" thread. The original thought was to pool resources to get a silver contract and stand for delivery. It has evolved a lot since. California lawyer posted a good summary late in the thread.

The current thinking is we stand for delivery and then mint "turds" for distribution amp g the buyers. The point- stack heavy, and take it directly from the belly of the beast. Risk is small per buyer, so buyers would have to accept the potential loss. But it would be a small step in taking the fight to the EE.

Many are in favor, many wont participate. Would be individual choice. But we do need a sponsor we can all trust to help us get organized. You were nominated, along with enlisting Andy's help with the contract purchase.

At last count I believe we had 8% of the funds pledged.

There you go.

Edward G
Jan 3, 2013 - 1:00pm

Not enough

We know it's not enough, and I've felt they know it's not. The luke-warm response from the markets post-QEx, market-juicing I said once before, either that or it was a really skillful pick just to be enough to prevent cold turkey...

Now we can also see how the coming serious stuff will play out in US Gov (I am a Brit btw).... it's the same the world over: Gov's that are expected to be the saviours can not be brought to throw the sheeple/po' folks under the bus with massive spending cuts, whether that's the intellectual imperative or not... in the most basic moral perspective of people it's not a palatable option...Brits and Euros have not even begun to countenance that option, the Conservative Party have pretended to, but spending is still rising.

People seem to view the likes of the T Party as sociopathic, there is no equivalent really anywhere else....FWIW I think they might be a little unrealistic in what they think they can achieve, it's so hard to put the toothpaste back in the tube now... the western world doesn't want a puritanical 'spare the rod and spoil the child' purge, so it will have to keep on cruisin' for a bruisin', a bruisin' that can be blamed not on action but attributed to an extreme economic weather's a horrific prospect, personally I think it's quite impressive on one level, the crisis management act of levitation since 2008, from the nanny state which is expected to deliver...

no great insight here I know....But we know it's not and can never be enough. Oh dear.

GrigeoFat Willie
Jan 3, 2013 - 1:02pm

Taking delivery

from Crimex. As opposed to using the vehicle Mr. T already spent so much work on - The Hard Assets Alliance.

And why set our target so low, why don't we take on the Fed, like JFK did ? Of course, he was well aware of the risks, and it didn't end well.

Jan 3, 2013 - 1:07pm

Ignore List

A belated Happy and prosperous New Year to all.

As a sign of a better year, and more tolerance for the antagonists on TFMR, I have deleted my Ignore List.

We all start over!


Urban Roman
Jan 3, 2013 - 1:08pm

@ Turd

Just read yesterday's thread. Start with this comment:

Then there are about six or seven pages of debate and discussion, and someone compiled a list of "sure, count me in" comments here:

... followed by more discussion. Dr. J posted a really good one here:

Jan 3, 2013 - 1:09pm

Well Wishes

Thanks, for the quick post, bonne voyage, safe and pleasant flight.

Best wishes for a happy, prosperous, peaceful 2013 to all the good hearted souls who populate TFMR.

Peace and good cheer to all.


"May the wind be at your back, the road rise to meet your feet, the sun shine warmly upon your face, all your days."

Quote -unknown at least to me at this time.. SilverBee. :0)

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